Saraswat wants govt aid to buy South Indian Co-op

ET Bureau|

Jun 14, 2008, 12.55 AM IST

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MUMBAI: There is a dim ray of hope for depositors of Mumbai-based South Indian Co-operative Bank, which had been under moratorium for almost four years.

Saraswat Cooperative Bank (SCB) has made a fresh application to the Reserve Bank of India (RBI) to acquire the ailing bank, but with some conditions. Sources said that SCB has asked for financial support from the government to acquire the bank. ���The losses of the bank are very high for us to absorb in the balance sheet. We have informed RBI that up to a particular level we can absorb the loss, but for the remaining amount will have to be funded,��� said bank sources. ���The losses of South Indian Cooperative Bank (SICB) is in the range of Rs 70-80 crore and the bank can at best finance up to 50% of its losses,��� he added.

It may be recalled that in August 2004, RBI had placed a ceiling of Rs 1,000 on withdrawals per depositor. Speaking to media, Saraswat Co-operative Bank (SCB) director Eknath Thakur said, ���We have given our proposal to RBI and hope to get an order in two months. This will provide relief to over 67,000 odd depositors.��� In 2004, SICB deposits were in the region of Rs 220 crore.

RBI had prohibited SIB from granting fresh loans, making investments, selling and disposing properties without its prior approval. It has 13 branches in Mumbai, Thane and Raigad districts of Maharashtra. SCB was keen in acquiring the bank from the very beginning provided they receive financial support from the government. Sources said that this time, SCB has received positive indications of support from the regulator and the government. Sources said that DICGC may step in to neutralise the losses, as it did in the case of Madhavpura Co-operative Bank.

Currently, SCB has 153 branches and has applied for 30 new branch licences. So far, it has received nine licences. Bank officials said that to expand its reach, the bank is looking at acquiring 2-3 co-operative banks this fiscal year. In 2007-08, SCB acquired three distressed urban co-operative banks. These included Sangli-based Annasaheb Karale Janata Sahakar Bank, Miraj-based Murgharajendra Sahakari Bank and Nashik Peoples Co-operative Bank.

Bank���s net profit rose 30% to Rs 202 crore as on March 2008 against Rs 155.2 crore as on March 31, 2007. Bank deposits rose 28% to Rs 11,430.8 crore as of March 31, 2008 while advances rose 17% to Rs 7,448.3. Net NPA of SCB were nil due to full provision of Rs 422 crore made by the bank. However, its gross NPA stood at 5.4% or Rs 396 crore, up from Rs 304 crore last year. The three distressed banks contributed to Rs 165 crore towards NPA.